To write off Discount on issue of debentures following entry is made:

The correct answer is Option (3) → Securities Premium Reserve A/c/Statement of Profit and Loss Dr. To Discount on Issue of Debentures A/c

Discount on issue of debentures is a capital loss. It is written off in the year the debentures are issued, first against Securities Premium Reserve (a capital profit) and, for any balance left, against the Statement of Profit and Loss.

Securities Premium Reserve A/c     Dr.
Statement of Profit and Loss     Dr.
    To Discount on Issue of Debentures A/c

The discount account has a debit balance, so writing it off means crediting it. Capital Reserve and Share Forfeiture balances are not used for this, and a shareholder is never debited for a discount the company allowed on debentures.